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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The price of a good measured in units of currency






2. The sum of consumer surplus and producer surplus






3. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






4. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






5. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






6. Ed < 1






7. A good for which higher income decreases demand






8. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






9. Ei = (%dQd good X)/(%d Income)






10. The rational decision maker chooses an action if MB = MC






11. Entry (or exit) of firms does not shift the cost curves of firms in the industry






12. Models where firms are competitive rivals seeking to gain at the expense of their rivals






13. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






14. The practice of selling essentially the same good to different groups of consumers at different prices






15. The change in quantity demanded resulting from a change in the price of one good relative to other goods






16. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






17. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






18. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






19. Two goods are consumer substitutes if they provide essentially the same utility to consumers






20. The marginal utility from consumption of more and more of that item falls over time






21. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






22. Ed = 8 - infinite change in demand to price change






23. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






24. Exists if a producer can produce a good at lower opportunity cost than all other producers






25. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






26. The total quantity - or total output of a good produced at each quantity of labor employed






27. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






28. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






29. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






30. A firm that has market power in the factor market (a wage-setter)






31. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






32. The additional benefit received from the consumption of the next unit of a good or service






33. Occurs when LRAC is constant over a variety of plant sizes






34. 0 < Ei < 1






35. AVC = TVC/Q






36. Models where firms agree to mutually improve their situation






37. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






38. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






39. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






40. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






41. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






42. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






43. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






44. Es = (%dQs) / (%dPrice)






45. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






46. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






47. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






48. ATC = TC/Q = AFC + AVC






49. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






50. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand